System and method of managing an insurance scheme

ABSTRACT

A method of managing an insurance policy includes storing in a memory a policy inception interest rate level which is an interest rate level payable on debt of the insured person. After the policy inception an interest rate level payable on debt of the insured person at that time is determined and compared with the inception interest rate level. If the determined interest rate level is higher than the inception interest rate level then a debt protector amount to be paid to the insured person is calculated and on the occurrence of an insured event the debt protector amount is paid to the insured person or their nominated beneficiary.

CROSS REFERENCE TO RELATED APPLICATIONS

This application claims the benefit of related South African PatentApplication ZA 2009/07507, filed Oct. 26, 2009, the contents of whichare incorporated herein by reference.

FIELD OF THE INVENTION

The invention relates to managing life insurance and life insurancebenefits.

BACKGROUND OF THE INVENTION

Conventionally, insurance policies such as life insurance policiesoperate on the basis that an insured person, sometimes referred to as aninsured life, pays a premium to the life insurer, and the life insurerpays a predetermined sum, referred to as the sum assured, to the insuredlife or his/her beneficiary on the occurrence of an insured event.Typical insured events are the insured life suffering disability,contracting a dread disease or dying.

The art described in this section is not intended to constitute anadmission that any patent, publication or other information referred toherein is “prior art” with respect to this invention, unlessspecifically designated as such. In addition, this section should not beconstrued to mean that a search has been made or that no other pertinentinformation as defined in 37 CFR §1.56(a) exists.

SUMMARY OF THE INVENTION

According to one example embodiment, a method of managing insurancepolicy includes:

storing in a memory a policy inception interest rate level which is aninterest rate level payable on debt of the insured person;

determining after the policy inception an interest rate level payable ondebt of the insured person at that time;

comparing the determined interest rate level with the inception interestrate level;

if the determined interest rate level is higher than the inceptioninterest rate level then calculating a debt protector amount to be paidto the insured person; and

on the occurrence of an insured event paying the debt protector amountto the insured person or their nominated beneficiary.

The method may further include periodically determining after the policyinception an interest rate level payable on debt of the insured personat that time;

comparing the determined interest rate level with the inception interestrate level;

if the determined interest rate level is higher than the inceptioninterest rate level then calculating a debt protector amount to be paidto the insured person;

adding the calculated debt protector amount to any previous periodicallycalculated debt protector amounts to arrive at a total debt protectoramount; and

on the occurrence of an insured event paying the total debt protectoramount to the insured person or their nominated beneficiary.

In addition, if the insured person reaches a predetermined age the debtprotector amount or total debt protector amount is paid out to theinsured person or their nominated beneficiary.

The inception interest rate level and the determined interest rate levelmay be set by one or more financial institutions or by a regionalauthority.

According to another example embodiment, a system for managing aninsurance policy includes:

a memory for storing a policy inception interest rate level which is aninterest rate level payable on debt of the insured person;

an interest rate determining module to determine after the policyinception an interest rate level payable on debt of the insured personat that time;

a comparator module to compare the determined interest rate level withthe inception interest rate level;

a calculating module to calculate a debt protector amount to be paid tothe insured person if the determined interest rate level is higher thanthe inception interest rate level; and

a payment module to pay the debt protector amount to the insured personor their nominated beneficiary on the occurrence of an insured event.

The system may further include:

the interest rate determining module periodically determining after thepolicy inception an interest rate level payable on debt of the insuredperson at that time;

the comparator module comparing the determined interest rate level withthe inception interest rate level;

calculating module calculating a debt protector amount to be paid to theinsured person if the determined interest rate level is higher than theinception interest rate level and adding the calculated debt protectoramount to any previous periodically calculated debt protector amounts toarrive at a total debt protector amount; and

the payment module on the occurrence of an insured event paying thetotal debt protector amount to the insured person or their nominatedbeneficiary.

In addition, if the insured person reaches a predetermined age thepayment module pays the debt protector amount or total debt protectoramount to the insured person or their nominated beneficiary.

The inception interest rate level and the determined interest rate levelmay be set by one or more financial institutions or by a regionalauthority.

BRIEF DESCRIPTION OF THE DRAWINGS

A more complete understanding of the present invention, and theattendant advantages and features thereof, will be more readilyunderstood by reference to the following detailed description whenconsidered in conjunction with the accompanying drawings wherein:

FIG. 1 is a block diagram illustrating an example system to implementthe methodologies described herein;

FIG. 2 is a block diagram illustrating an example method of managing aninsurance scheme; and

FIG. 3 is a block diagram illustrating a detailed view of an informationprocessing system according to one embodiment of the present invention.

DETAILED DESCRIPTION OF THE INVENTION

The systems and methodologies described herein relate to a system andmethod of managing an insurance scheme such as a life insurance scheme.

The present invention may be implemented by a traditional life insuranceplan operator for its members or may be implemented by another party.

Conventional life insurance schemes operate on the basis that an insuredperson, referred to as the insured life, pays premiums on a regularbasis to the life insurer, specifying a sum assured which is an amountto be paid out on the occurrence of an insured event. For example, onthe death of the insured life, a predetermined death benefit is paid tothe nominated beneficiaries of the insured life. If the insured life isdisabled or suffers a dread disease, a different, lesser amount is paidout.

The invention addresses the effect that interest rate increases have onthe debt of the insured life. Particularly, if the insured life has debtwhich they are servicing, any increase in interest rates negativelyaffects their financial position significantly. Thus, the quantum ofinsurance purchased in the event of any insurable event may be correctat the inception of the policy, but may not be sufficient after interestrate increases. The invention provides a system and method of managingan insurance scheme to address this.

The method and system will be described with reference to these kinds ofschemes but it will be appreciated that the method and system couldequally be applied to other types of insurance schemes.

It will also be appreciated that the system and methodology may beimplemented by any relevant person or organisation. For example, thesystem and methodology may be operated by the organisation whichoperates the life insurance scheme or may be implemented by anotherassociated organisation. In one example the system and methodology maybe implemented by a financial organisation which issues credit cards toits members.

For purposes of illustration, the system and methodology will bedescribed herein as being operated by the managers of a life insurancescheme.

A plurality of life changing events are defined. The plurality of lifechanging events in the example includes disability, contracting a dreaddisease or dying as these are typical of the kind of events which areinsured by life insurance schemes. However, it will be appreciated thatin other contexts these life changing events may be other events such asthe birth of a child or changing jobs to name but a few examples.

However, a factor that is not heretofore considered in life insurance isthe effect that interest rate increases have on the debt of the insuredlife. Particularly, if the insured life has debt which they areservicing, any increase in interest rates negatively affects theirfinancial position significantly.

Thus, the quantum of insurance purchased in the event of any insurableevent may be correct at the inception of the policy but may not besufficient after interest rate increases.

Referring to FIG. 1 of the accompanying Figures, an exemplary system forimplementing the above methodologies is shown.

The system includes a server 12 which includes a number of modules toimplement the methodologies described herein.

The modules described may be implemented by a machine-readable mediumembodying instructions which, when executed by a machine, cause themachine to perform any of the methods described above.

It will be appreciated that embodiments of the present invention are notlimited to such architecture, and could equally well find application ina distributed, or peer-to-peer, architecture system. Thus the modulesillustrated could be located on one or more servers operated by one ormore institutions.

The system implements a method of managing an insurance policy thatincludes storing in a memory 10 associated with the server 12 a policyinception interest rate level which is an interest rate level payable ondebt of the insured person.

In the accompanying drawings, the memory is illustrated as a database10. It will be appreciated that the memory could take any other suitableform.

The inception interest rate level can be obtained by determining module14 accessing an official database or website to obtain this informationor by receiving this information via communications network 22.

In any event, the inception interest rate level and the determinedinterest rate level may be set by one or more financial institutions ormay be set by a regional authority such as a government in a country.

In South Africa, the interest rate level is set by the relevantfinancial institution but is linked to an interest rate set by the SouthAfrican Reserve Bank and is usually slightly higher than the interestrate set by the Reserve Bank.

In any event, what is important about the interest rate level is thatthis determines the interest amount payable by the insured person ifthey have any debt. Therefore, any increase in the interest rateeffectively means that the insured person will require more money toservice their debt and will have less free money available to financetheir living expenses.

In order to protect against this, the method includes determining afterthe policy inception an interest rate level payable on debt of theinsured person at that time.

The interest rate level can again be obtained by determining module 14accessing an official database or website to obtain this information orby receiving this information via communications network 22.

A comparing module 16 compares the determined interest rate level withthe inception interest rate level and if the determined interest ratelevel is higher than the inception interest rate level then acalculating module 18 calculates a debt protector amount to be paid tothe insured person.

On the occurrence of an insured event, a payment module 20 pays the debtprotector amount to the insured person or their nominated beneficiary.

In one example, this is implemented by the payment module 20communicating via a communications network 22 with a server of afinancial institution (not shown) and instructing the server of thefinancial institution to pay the insured person or their nominatedbeneficiary.

It is envisaged that the methodology will be implemented by periodicallydetermining after the policy inception an interest rate level payable ondebt of the insured person at that time. One example of periodically ismonthly.

In this example, the determined interest rate level is each timecompared with the inception interest rate level and if the determinedinterest rate level is higher than the inception interest rate levelthen a debt protector amount to be paid to the insured person iscalculated by the calculating module 18.

However, in this example, the calculating module 18 will also add thecalculated debt protector amount to any previous periodically calculateddebt protector amounts to arrive at a total debt protector amount.

On the occurrence of an insured event the total debt protector amountwill be paid to the insured person or their nominated beneficiary.

In a further example embodiment, if the insured person reaches apredetermined age the debt protector amount or total debt protectoramount as the case may be is paid out to the insured person or theirnominated beneficiary.

An example of the predetermined age may be a retirement age such as 65.

Thus the benefit described essentially implements a fund that pays outat age 65 or on earlier death of the insured person and the funds buildup if there are interest rate increases that could impact on the insuredpersons' financial wealth.

In addition, the compliance of the insured person with a wellnessprogram may be monitored and may play a part in the calculating of thedebt protector amount.

An example of such a wellness program is presently managed by theapplicant that manages a traditional life and health insurance plantogether with their wellness program disclosed in the applicant's SouthAfrican granted patent number ZA 99/1746, the contents of which areincorporated herein by reference.

In an example wellness program, members participate in approved relatedfacilities and/or services. For example, members use gymnasiums,Smokenders (a registered trademark of Smokenders USA, of Chicago, Ill.),and Weighless (an abandoned registration of Weighless, LLC, of BrooklynCenter, MN).

In one example, members are awarded points and depending on the totalnumber of points allocated to a member, they fall within one of fivestatuses. In the implementation of the wellness program, these statuseshave been named in ascending order of value, blue, bronze, silver, goldand diamond. All members are placed initially in the blue status. Once amember has accumulated a predetermined number of points, his/her statusis upgraded to the next appropriate level.

It will be appreciated that for purposes of the present invention thewellness program could be operated by the insurer or could be operatedby a third party that operates the wellness program and then informs theinsurer of the degree of participation of the insured person with thewellness program.

This could occur by a third party transmitting data to the at least oneserver 12 operated by the insurer. The data is received at the at leastone server and stored in database 10 associated with the at least oneserver.

In one example the data will include at least an identity of the insuredperson and data identifying the status of the insured person, forexample blue, bronze, silver, gold and diamond.

In order to determine the status, a monitoring of the compliance of theinsured person with the wellness program includes receiving insuredperson usage information associated with the insured person's usage ofthe wellness program and determining, based on the usage information, astatus level associated with the insured person for the wellnessprogram, wherein the status level indicates a degree of participation inthe wellness program

The usage information received may include information associated with aplurality of separate and distinct occurrences of wellness programparticipation by the insured person.

In addition, the method may further include determining a status levelassociated with the insured person that further includes receiving theusage information from an information processing system and assigning agiven point value to each separate and distinct occurrence of wellnessprogram participation.

A total point value is determined based on an accumulation of each givenpoint value assigned to each separate and distinct occurrence ofwellness program participation.

The total point value is then compared to a plurality of point ranges,each point range in the plurality of point ranges being associated witha status level and identifying a point range in the plurality of pointranges corresponding to the total point value.

Finally, a status level is assigned that is associated with the pointrange that has been identified to the at least one employee.

This status level is then used to adjust the amount of the debtprotector amount.

One method of implementing the above described methodology is asfollows.

The insured person selects between two options. In one example, thefirst option is 20% of their basic insured amount and the second optionis 40% of the basic insured amount.

Using the second option as an illustrative example and using a basicinsured amount of R1,000,000 for illustrative purposes, since in thisexample the insured person has selected the 40% option of a R1,000,000basic fund, this equates to an amount of R400,000.3% of R400,000 isequal to R12,000 and this is assumed to be the notional monthly debtinstallment that the insured person is required to pay.

An increase in interest rate levels then uses this notional monthly debtinstallment as follows:

Example of monthly Example of monthly Increase in prime Percentage ofinsured benefit of 20% on R1m benefit of 40% on R1m interest rateinstalment paid Life Fund Life Fund <=0.5%  0% — — [0.5%, 1.5%)  4% 240480 [1.5%, 2.5%)  8% 480 960 [2.5%, 3.5%) 12% 720 1,440 [3.5%, 4.5%) 16%960 1,920 [4.5%, 5.5%) 22% 1,320 2,640 [5.5%, 6.5%) 26% 1,560 3,120[6.5%, 7.5%) 30% 1,800 3,600 [7.5%, 8.5%) 35% 2,100 4,200 [8.5%, 9.5%)40% 2,400 4,800 [9.5%, 10%) 45% 2,700 5,400 >=10% 50% 3,000 6,000 MaxTotal 36,000 72,000 Accumulation

Thus, if the interest rate increases by 1% in a given month then R480will be the calculated amount payable to the insured person for thatmonth.

A record of this amount will be stored in the memory 10 and as eachmonth goes by, if the interest rate is higher than the starting interestrate a further amount will be added to this amount and the total willgrow.

The last row in the table indicates a maximum total accumulation whichis an upper limit for this benefit.

As discussed above, in another example, the debt protector amount can belinked to the compliance of the insured person with the wellness programdescribed above so that the better the compliance with the wellnessprogram the larger the debt protector amount.

FIG. 3 is a high level block diagram illustrating a more detailed viewof a computing system 600 of the invention, such as any of theinformation processing systems of the invention, including for examplethe system described with respect to FIG. 1, or for carrying out themethods of the invention, for example the method as described withrespect to FIG. 2.

The computing system 600 is based upon a suitably configured processingsystem adapted to implement an exemplary embodiment of the presentinvention. For example, a personal computer, workstation, or the like,may be used. In one embodiment of the present invention, the computingsystem 600 includes one or more processors, such as processor 604. Theprocessor 604 is connected to a communication infrastructure 602 (e.g.,a communications bus, crossover bar, or network). Various softwareembodiments are described in terms of this exemplary computer system.After reading this description, it becomes apparent to a person ofordinary skill in the relevant art(s) how to implement the inventionusing other computer systems and/or computer architectures.

The computing system 600 can include a display interface 608 thatforwards graphics, text, and other data from the communicationinfrastructure 602 (or from a frame buffer) for display on the displayunit 610. The computing system 400 also includes a main memory 606,preferably random access memory (RAM), and may also include a secondarymemory 612 as well as various caches and auxiliary memory as arenormally found in computer systems. The secondary memory 612 mayinclude, for example, a hard disk drive 614 and/or a removable storagedrive 616, representing a floppy disk drive, a magnetic tape drive, anoptical disk drive, and the like. The removable storage drive 616 readsfrom and/or writes to a removable storage unit 618 in a manner wellknown to those having ordinary skill in the art.

Removable storage unit 618, represents a floppy disk, a compact disc,magnetic tape, optical disk, etc. which is read by and written to byremovable storage drive 616. As are appreciated, the removable storageunit 618 includes a computer readable medium having stored thereincomputer software and/or data. The computer readable medium may includenon-volatile memory, such as ROM, Flash memory, Disk drive memory,CD-ROM, and other permanent storage. Additionally, a computer medium mayinclude, for example, volatile storage such as RAM, buffers, cachememory, and network circuits. Furthermore, the computer readable mediummay comprise computer readable information in a transitory state mediumsuch as a network link and/or a network interface, including a wirednetwork or a wireless network that allow a computer to read suchcomputer-readable information.

In alternative embodiments, the secondary memory 612 may include othersimilar means for allowing computer programs or other instructions to beloaded into the computing system 600. Such means may include, forexample, a removable storage unit 622 and an interface 620. Examples ofsuch may include a program cartridge and cartridge interface (such asthat found in video game devices), a removable memory chip (such as anEPROM, or PROM) and associated socket, and other removable storage units622 and interfaces 620 which allow software and data to be transferredfrom the removable storage unit 622 to the computing system 600.

The computing system 600, in this example, includes a communicationsinterface 624 that acts as an input and output and allows software anddata to be transferred between the computing system 600 and externaldevices or access points via a communications path 626. Examples ofcommunications interface 624 may include a modem, a network interface(such as an Ethernet card), a communications port, a PCMCIA slot andcard, etc. Software and data transferred via communications interface624 are in the form of signals which may be, for example, electronic,electromagnetic, optical, or other signals capable of being received bycommunications interface 624. The signals are provided to communicationsinterface 624 via a communications path (i.e., channel) 626. The channel626 carries signals and may be implemented using wire or cable, fiberoptics, a phone line, a cellular phone link, an RF link, and/or othercommunications channels.

In this document, the terms “computer program medium,” “computer usablemedium,” “computer readable medium”, “computer readable storageproduct”, and “computer program storage product” are used to generallyrefer to media such as main memory 606 and secondary memory 612,removable storage drive 616, and a hard disk installed in hard diskdrive 614. The computer program products are means for providingsoftware to the computer system. The computer readable medium allows thecomputer system to read data, instructions, messages or message packets,and other computer readable information from the computer readablemedium.

Computer programs (also called computer control logic) are stored inmain memory 406 and/or secondary memory 612. Computer programs may alsobe received via communications interface 624. Such computer programs,when executed, enable the computer system to perform the features of thevarious embodiments of the present invention as discussed herein. Inparticular, the computer programs, when executed, enable the processor604 to perform the features of the computer system.

It will be appreciated by persons skilled in the art that the presentinvention is not limited to what has been particularly shown anddescribed herein above. In addition, unless mention was made above tothe contrary, it should be noted that all of the accompanying drawingsare not to scale. A variety of modifications and variations are possiblein light of the above teachings without departing from the scope andspirit of the invention.

Although specific embodiments of the invention have been disclosed,those having ordinary skill in the art will understand that changes canbe made to the specific embodiments without departing from the spiritand scope of the invention. The scope of the invention is not to berestricted, therefore, to the specific embodiments, and it is intendedthat the appended claims cover any and all such applications,modifications, and embodiments within the scope of the presentinvention.

All references cited herein are expressly incorporated by reference intheir entirety. In addition, unless mention was made above to thecontrary, it should be noted that all of the accompanying drawings arenot to scale. There are many different features to the present inventionand it is contemplated that these features may be used together orseparately. Thus, the invention should not be limited to any particularcombination of features or to a particular application of the invention.Further, it should be understood that variations and modificationswithin the spirit and scope of the invention might occur to thoseskilled in the art to which the invention pertains. Accordingly, allexpedient modifications readily attainable by one versed in the art fromthe disclosure set forth herein that are within the scope and spirit ofthe present invention are to be included as further embodiments of thepresent invention.

1. A method of managing an insurance policy including: storing in amemory a policy inception interest rate level which is an interest ratelevel payable on debt of the insured person; determining after thepolicy inception an interest rate level payable on debt of the insuredperson at that time; comparing the determined interest rate level withthe inception interest rate level; if the determined interest rate levelis higher than the inception interest rate level then calculating a debtprotector amount to be paid to the insured person; and on the occurrenceof an insured event paying the debt protector amount to the insuredperson or their nominated beneficiary.
 2. A method according to claim 1further including: periodically determining after the policy inceptionan interest rate level payable on debt of the insured person at thattime; comparing the determined interest rate level with the inceptioninterest rate level; if the determined interest rate level is higherthan the inception interest rate level then calculating a debt protectoramount to be paid to the insured person; adding the calculated debtprotector amount to any previous periodically calculated debt protectoramounts to arrive at a total debt protector amount; and on theoccurrence of an insured event paying the total debt protector amount tothe insured person or their nominated beneficiary.
 3. A method accordingto claim 1 wherein if the insured person reaches a predetermined age thedebt protector amount is paid out to the insured person or theirnominated beneficiary.
 4. A method according to claim 2 wherein if theinsured person reaches a predetermined age the total debt protectoramount is paid out to the insured person or their nominated beneficiary.5. A method according to claim 1, wherein the inception interest ratelevel and the determined interest rate level are set by one or morefinancial institutions.
 6. A method according to claim 1, wherein theinception interest rate level and the determined interest rate level areset by a regional authority.
 7. A system for managing an insurancepolicy, the system including: a memory for storing a policy inceptioninterest rate level which is an interest rate level payable on debt ofthe insured person; an interest rate determining module to determineafter the policy inception an interest rate level payable on debt of theinsured person at that time; a comparator module to compare thedetermined interest rate level with the inception interest rate level; acalculating module to calculate a debt protector amount to be paid tothe insured person if the determined interest rate level is higher thanthe inception interest rate level; and a payment module to pay the debtprotector amount to the insured person or their nominated beneficiary onthe occurrence of an insured event.
 8. A system according to claim 7further including: the interest rate determining module periodicallydetermining after the policy inception an interest rate level payable ondebt of the insured person at that time; the comparator module comparingthe determined interest rate level with the inception interest ratelevel; calculating module calculating a debt protector amount to be paidto the insured person if the determined interest rate level is higherthan the inception interest rate level and adding the calculated debtprotector amount to any previous periodically calculated debt protectoramounts to arrive at a total debt protector amount; and the paymentmodule on the occurrence of an insured event paying the total debtprotector amount to the insured person or their nominated beneficiary.9. A system according to claim 7 wherein if the insured person reaches apredetermined age the payment module pays the debt protector amount tothe insured person or their nominated beneficiary.
 10. A systemaccording to claim 7 wherein if the insured person reaches apredetermined age the payment module pays the total debt protectoramount to the insured person or their nominated beneficiary.
 11. Asystem according to claim 7, wherein the inception interest rate leveland the determined interest rate level are set by one or more financialinstitutions.
 12. A system according to claim 7, wherein the inceptioninterest rate level and the determined interest rate level are set by aregional authority.